Premier Inn owner Whitbread to cut 1,500 jobs

Premier Inn owner Whitbread is to cut 1,500 jobs as it closes restaurants and expands its hotel business.

It plans to cut its number of branded restaurants by more than 200 in favour of building more hotel rooms.

The job cuts, which are subject to consultation, will come from a total UK workforce of 37,000 employees.

The group's restaurant brands including Brewers Fayre and Beefeater.

It plans to sell 126 of its less profitable restaurants, with 21 sales already having been agreed.

It will also close 112 restaurants and convert the space into new hotel rooms.

A spokesperson said that teams were being told about the cuts on Tuesday, and Whitbread would not say at this stage which restaurants were closing.

Its catering brands also include Bar+Block, Thyme, Cookhouse+Pub, Table Table and Whitbread Inns.

The food chains will be affected across the board, and closures will depend on where the restaurant is sited, rather than its brand.

Whitbread said the changes would add more than 3,500 hotel rooms across its estate, and that the new hotel rooms would be served by unbranded restaurants.

Dominic Paul, Whitbread's chief executive, said of the job cuts: "Sometimes businesses do need to make difficult decisions like this."

However, he added: "I think we're doing it for absolutely the right reasons. It's going to support a material investment in this business and this country over the next few years."

Referring to the job cuts, he said the decision was "really challenging for us. It's really important that we therefore handle that in the right way for our people."

The moves are part of a three-year £150m cost-cutting programme.

Whitbread said it would try to find alternative opportunities for affected staff wherever possible, through new jobs created by its plans and through existing recruitment.

The cuts come after Whitbread's pre-tax profit rose 21% to £452m for the year to 29 February.

It said the 112 branded restaurants it plans to turn into hotel rooms made a loss of £19m in the year, while the 126 restaurants it is selling made a loss of £9m.

They were hit by fewer visits from non-hotel guests, Whitbread said.

The cuts will leave it with 196 branded restaurants, and 387 restaurants that are unbranded and part of the hotel.

Derren Nathan, head of equity research at Hargreaves Lansdown, said that strong hotel occupancy meant that Whitbread's in-house restaurants were doing well, but the pub and eating out market was seeing a drop in demand.

He said the company's plans were not due to a weak performance - although its food and drink business was down 2% this year, this was against a 10% rise the year before - but rather were a "shrewd move" that would allow Whitbread to "pursue hotel expansion with lower investment".

"Conversions are cheaper than new hotels," he said, adding that the work would be part-funded by some of the restaurants the group is selling.